Atlanta Mayor Shirley Franklin said jobs may have to be cut in response to the city’s budget deficit.

Franklin earlier this month announced a $70 million shortfall for the current fiscal year and said disciplined spending could solve the problem, but at a press conference Monday she said some city workers’ jobs may be on the line.

Franklin said the city’s financial rut stems mainly from an ailing economy that has led to declines in sales taxes. The fallout from the housing crisis has taken a toll on property taxes.

Officials also failed to include an $8 million subsidy in the current year’s budget to fund Underground Atlanta, a tourist and entertainment district in the downtown area. In addition, the city has an antiquated accounting system, but officials say they have updated it recently to avoid errors that could leave it unclear as to how dollars are being spent.

Although the budget problems are serious, Franklin stressed on Monday that her administration was working to resolve it. “We don’t know the answer yet,” she said.

Making matters worse is an expected shortfall in future fiscal years, which could bring revenue reductions of as much as 22%. “We see both a shortfall for 2008, and a very tough budget for 2009,” the mayor said. “It’s tough. Tough and tough.”

She added that the city is faced with the slowest economy since she took office in 2002.

Rating agency analysts are watching Atlanta’s situation. Standard & Poor’s, which rates the city AA-minus, last month changed its outlook to stable from positive. Moody’s Investors Service rates Atlanta Aa3.

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